Streamlining KYC Workflow for Compliance and Efficiency

The key to a smooth KYC workflow is to automate as much of the process as possible, which can reduce manual errors by up to 90%. This can be achieved by using AI-powered tools that can quickly and accurately verify customer identities.

Manual KYC processes can be time-consuming and labor-intensive, requiring significant resources and personnel. In contrast, automated KYC workflows can complete the process in a matter of minutes.

By streamlining the KYC workflow, organizations can reduce the risk of non-compliance and associated fines, which can be as high as $1 million per instance. This is particularly important for financial institutions, which are subject to strict regulatory requirements.

Compliance is a critical aspect of KYC workflow, and it involves verifying and analyzing customer identifying data sources for any inconsistencies or fraud. This includes screening against government watchlists, such as global PEP, SIP/SIE, RCA, and terrorist lists.

To comply with customer due diligence requirements, banks must have the ability to predict what types of financial transactions a customer might make so that the bank can monitor and detect suspicious activity. This involves assigning a risk rating to each customer and monitoring their account activity.

Banks must also maintain continuous monitoring to ensure customer activity is consistent with stored customer data. This includes verifying the purpose and nature of the account, and ensuring that the customer has provided accurate information about their business type, funding sources, and future transactions.

Enhanced due diligence measures should be taken when a customer is flagged as high-risk, such as further investigation, a request for more documents, and increased monitoring. This helps to identify and mitigate potential risks associated with the customer.

Customer due diligence involves collecting available identifying data from authentic and trusted sources, determining the purpose and nature of the account, and maintaining continuous monitoring to ensure the activity is consistent with stored customer data. This requires a comprehensive toolkit that allows for customization of onboarding processes and real-time alerts in a centralized platform.

Banks must also comply with geography-specific regulations, such as ETSI TS 119 461, and maintain a no-code configurability to modify workflows, rules, and parameters without relying on IT resources. This enables rapid implementation and adaptation to changing regulatory requirements.

A KYC workflow is a series of steps that financial institutions follow to verify the identity of their customers. This process starts with identifying the customer before doing business with them, as mandated by global and local regulations.

The goal of KYC is to prevent financial crimes such as money laundering, fraud, terrorism financing, and identity theft. Failure to comply with stringent KYC regulations can result in stiff penalties, with US financial institutions paying approximately $2 billion in fines for non-compliance in 2021.

A KYC workflow typically involves verifying customer IDs in seconds with low-friction and accurate document verification. This can be done using 2,500+ supported documents worldwide, making it possible to onboard customers anywhere.

To create a seamless customer onboarding experience, financial institutions should consider using advanced workflow triggers, enabling event-based, risk-based, or threshold-based triggers as well as perpetual monitoring. This can help move past periodic checks and overlooked risks.

The KYC process includes four main components: Customer Identification Program (CIP), Customer Due Diligence (CDD), Enhanced Due Diligence (EDD), and Ongoing Monitoring. These components work together to ensure that financial institutions have a comprehensive understanding of their customers.

Here is a breakdown of the KYC process steps:

By following a well-structured KYC workflow, financial institutions can ensure that they are complying with regulations and providing a seamless customer onboarding experience.

Automating the Know Your Customer (KYC) process with AI can save time and reduce costs. With AI-powered solutions, you can automate KYC identity verification and reduce the cost of compliance.

Using AI can help you verify the authenticity of identifying documents in seconds, capturing biometric data and validating customer identity through cross-referencing.

AI-powered solutions can also optimize the KYC process, making it faster and more efficient. They can scale with your business, adapting to accommodate entry to new markets or business lines.

Here are some key capabilities of an optimized KYC process:

Intelligent automation has become crucial for addressing complex regulatory obligations and managing risk in global banking organizations. AI algorithms can help analyze AML alerts faster than compliance teams alone can, and automation can improve visibility into your decision-making process.

Onfido's Compliance Suite is an eIDAS-compliant onboarding solution for regulated industries like financial services.

It brings together ETSI-certified identity verification and QES in Onfido Studio, creating a flexible and user-friendly workflow.

Onfido Studio is a key part of this solution, allowing you to build EU KYC and AML workflows.

With Onfido Studio and Compliance Suite, you can meet complex local regulatory needs while onboarding more customers.

This combination enables a seamless end-to-end workflow, making it easier to verify identities and complete onboarding processes.

Onfido's solution is designed to be efficient and effective, helping you to onboard more customers while maintaining compliance.

In Canada, FINTRAC compliance is a must, and accepted identity verification methods include various forms of documentation.

KYC regulations in the UK are overseen by the FCA, requiring adherence to specific guidelines.

The FCA is responsible for ensuring UK financial services comply with KYC regulations.

In Romania, the Address Decision no. 564/2021 outlines the requirements for customer onboarding with an automated KYC partner.

Bank Negara Malaysia (BNM) compliance is crucial in Malaysia, where digital onboarding journeys must be compliant and scalable.

The BSP is in charge of BSP compliance in the Philippines, where navigating this regulation is key to onboarding new customers and detecting fraudulent activity.

When working with international users, it's essential to understand the country-specific requirements for verification. In some countries, non-documentary verifications are attempted.

The United States, for instance, is one such country where non-documentary verifications are attempted. This means that KYC will try to verify users without requiring documentation.

The United Kingdom and Australia are also countries where non-documentary verifications are attempted. These countries have specific country IDs: GBR and AUS, respectively.

Here are the countries where non-documentary verifications are attempted:

In Canada, the Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) oversees KYC compliance.

The requirements for identity verification in Canada are specific and must be followed to avoid fines and penalties.

To comply with FINTRAC regulations, you'll need to learn about the accepted identity verification methods in Canada.

FINTRAC requires financial institutions to verify the identity of their customers, which includes verifying their name, date of birth, and address.

In Malaysia, Bank Negara Malaysia (BNM) compliance is a must for digital onboarding journeys. To ensure compliance, you'll need to navigate the country's regulations.

If you're conducting KYC for customers in Malaysia, you'll need to follow the same guidelines as for other countries, including verifying their identity through document upload. For document upload, you can use the POST/documents endpoint in the API Reference.

When it comes to photo ID types, you'll need to consider the requirements for each type. Here's a breakdown of the photo ID types and the sides required for each:

To determine the current KYC status of a customer, you can use the GET KYC Status endpoint or KYC events from the Amazon SQS in the API Reference.

Romania has a specific requirement for customer onboarding, which is covered by Address Decision no. 564/2021.

This decision specifies the need for an automated KYC partner for customer onboarding.

In the Philippines, the central bank, BSP, requires compliance with its regulations for Know Your Customer (KYC) procedures.

The BSP's end-to-end platform helps navigate compliance, onboard new customers, and detect fraudulent activity.

The Philippines has specific requirements for KYC, which financial institutions must adhere to in order to operate within the country's financial system.